Personal Finance

New energy bill help ruled out after Ofgem price cap drop

Energy bill help will end this summer despite prices remaining historically high.

The Government has ruled out further measures to lessen the burden of the cost of electricity and gas as bills are starting to fall.

Ofgem's energy price cap fell to £2,074 when it was announced on May 25 - with the limit coming into effect in July.

Although Ofgem's previous cap was £3,280, household bills have been limited to £2,500 since October under the Government's Energy Price Guarantee Scheme, which saw the Treasury subsidise household energy use.

Britons also received £400 off their energy bills over the winter - bringing the average bills down to about £2,100 - but this support ended in April.

That means that although Ofgem's price cap has dramatically reduced - from a high of £4,279 in January - households won't feel much difference to their bills.

The new £2,074 price cap is almost double the £1,138 cap in April 2021.

Ahead of the announcement, Environment Secretary Therese Coffey said the Government would no longer help households with their bills, but instead concentrate on building more sustainable sources of energy for the future.

She told the BBC's Sunday with Laura Kuenssberg: "I think that the critical thing that people will be expecting from the government is getting that electricity pipeline flowing within our own country rather than constantly being reliant on aspects of the link to the gas prices in the world."

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Analysts at Cornwall Insight predicted the price cap would be set at £2,054, and believe it will drop to £1,976 in October.

Dr Craig Lowrey, principal consultant at Cornwall Insight, said bills would remain "relatively stable over the next nine months".

However, he doesn't believe prices will drop to pre-Covid levels "before the end of the decade at the earliest".

He added: "Regrettably, it looks as if these prices may become the new normal."

Erin Yurday, co-founder and CEO of consumer research website NimbleFins said: "The drop in Ofgem's energy price cap is welcome news, but it doesn't mean bill payers will be saving much money - yet.

"Households have lost the £400 Government subsidy which cushioned the blow over winter, so this new price cap won't make much difference. However, we're heading in the right direction and, let's face it, this is a huge drop in where the price cap currently is.

"Gas futures prices show a bumpy road over the next few winters and it's highly unlikely we'll see prices returning to pre-Covid levels any time soon. But this is a downward trend nonetheless which hopefully signals we're turning the tide on inflation.

"Although energy switching isn't yet rife, it may be time to start looking at the performance of providers to decide who has good service and who is charging the least."

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Helen Barnett

Helen is a journalist, editor and copywriter with 15 years' experience writing across print and digital publications. She previously edited the Daily Express website and has won awards as a reporter. Read more here.


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